Sea Production gets holder approval to extend bonds to February 2014

By Susanna Moon

Chicago, March 21 - Sea Production Ltd. adopted proposed amendments to its $130 million floating-rate callable senior secured bonds issued in 2007 after bondholders approved the measure at a meeting held Wednesday.

The proposal garnered 100% of votes, and there were enough holders to form a quorum, according to a notice from trustee Norsk Tillitsmann ASA.

The company sought to extend the maturity date to Feb. 14, 2014 and to be granted the option of paying interest in kind through the issue of additional bonds, according to a notice from trustee Norsk Tillitsmann on March 13.

Bondholders who voted in favor of the proposals will be compensated with

• A partial redemption of the bonds at par plus accrued interest, subject to a minimum amount of $36 million;

• An increase in the cash interest rate of the bonds to Libor plus 1,000 basis points. If there is insufficient cash to pay any portion of the accrued interest on an interest payment date, the unpaid portion will be satisfied by the issue of additional bonds on a prorated basis in an amount equal to (a) the amount of interest that would have accrued on the applicable portion of the outstanding principal amount if the interest rate had been Libor plus 1,300 bps plus (b) the unpaid interest;

• A cash sweep mechanism on each interest payment date for amounts in excess of $2.5 million to be used to redeem bonds at a price of 101% of par plus accrued interest, subject to a minimum redemption level of $200,000;

• Additional requirements for mandatory pre-payment upon the occurrence of certain events, including a change of control;

• Amortizing principal payments of $5 million at 101% of par on Feb. 14, 2013 and on Aug. 14, 2013; and

• Additional security in favor of the bond trustee.

The company had been in discussions with an informal ad-hoc committee of bondholders representing 93.85% of the outstanding principal amount of the securities. Those bondholders agreed to vote in favor of the proposals.

As noted before, Sea Production is in discussions with the committee of bondholders to explore a possible restructuring of the bonds. The company said it has experienced certain operational challenges in recent years that have impacted its profitability and cash flow.

The company previously requested, among other changes to the bonds, an extension of the maturity date to April 13, 2012 from Feb. 14, 2012. The company asked to push back the due date, because it did not have sufficient funds to repay the bonds in full on Feb. 14. The resolution passed with 100% of the votes present at a meeting on Feb. 7.

Sea Production makes floating production storage and offloading units and floating storage and offloading units. The company is based in Oslo.

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